Earlier this week Google took the unprecedented step of disclosing a breach which does not legally require disclosure. Google's reasons for the disclosure are tightly linked to its concerns about human rights in China and its views on China's reasons for breaching Google's email systems. These last two points are well worth discussing and are being discussed at length all over the blogosphere. However, I am going to focus on the security and disclosure issues.

First regarding disclosure, IT risk reduction strategies greatly benefit from public breach disclosure information. In other words, organizations learn best what to do and avoid overreacting to vendor scare tactics by understanding the threats that actually result in breaches. This position is best articulated by Adam Shostack and Andrew Stewart in their book, "The New School of Information Security."

Organizations have been so reluctant to publicly admit they suffered breaches, the Federal and many state governments had to pass laws to force organizations to disclose breaches when customer or employee personal information was stolen.

Regarding the attack itself, it represents a type of attack that is relatively new called "advanced persistent threats" (APT) which in the past had primarily been focused on governments. Now they are targeting companies to steal intellectual property. McAfee describes the combination of spear fishing, zero-day threats, and crafted malware here. The implications:

The world has changed. Everyone’s threat model now needs to be adapted
to the new reality of these advanced persistent threats. In addition to
worrying about Eastern European cybercriminals trying to siphon off
credit card databases, you have to focus on protecting all of your core
intellectual property, private nonfinancial customer information and
anything else of intangible value.

Gunter Ollman, VP of Research at Damballa, discusses APT's further here, focusing on detecting these attacks by detecting and breaking the Command and Control (CnC) component of the threat. The key point he makes is:

Malware is just a tool. The fundamental element to these (and
any espionage attack) lies with the tether that connects the victim
with the attacker. Advanced Persistent Threats (APT), like their bigger
and more visible brother “botnets”, are meaningless without that tether
– which is more often labeled as Command and Control (CnC).

Wired Magazine reported this week that Wal-Mart kept secret a breach it discovered in November 2006 that had been ongoing for 17 months. According to the article, Walmart claimed there was no reason to disclose the exploit at the time as they believe no customer data or credit card information was breached.

They are admitting that custom developed Point-of-Sale software was breached. The California Breach Law covering breached financial information of California residents had gone into effect on July 1, 2003 and was extended to health information on January 1, 2009. I blogged about that here.

I think it would be more accurate to say that the forensics analysts hired by Wal-Mart could not "prove" that customer data was breached, i.e., could not find specific evidence that customer data was breached. One key piece of information the article revealed, "The company’s server logs recorded only unsuccessful log-in attempts, not successful ones, frustrating a detailed analysis."

Based on my background in log management, I understand the approach of only collecting "bad" events like failed log-ins. Other than this sentence the article does not discuss what types of events were and were not collected. Therefore they have very little idea of what was really going on.

The problem Wal-Mart was facing at the time was that the cost of collecting and storing all the logs in an accessible manner was prohibitive. Fortunately, log data management software has improved and hardware costs have dropped dramatically. In addition there are new tools for user activity monitoring.

However, my key reaction to this article is my disappointment that Wal-Mart chose to keep this incident a secret. It's possible that news of a Wal-Mart breach might have motivated other retailers to strengthen their security defenses and increase their vigilance, which might have reduced the number of breaches that occurred since 2006. It may also have more quickly increased the rigor QSAs applied to PCI DSS audits.

In closing, I would like to call attention to Adam Shostack's and Andrew Stewart's book, "The New School of Information Security," and quote a passage from page 78 which talks about the value of disclosing breaches aside from the need to inform people whose personal financial or health information may have been breached:

"Breach data is bringing us more and better objective data than any past information-sharing initiative in the field of information security. Breach data allows us to see more about the state of computer security than we've been able to with traditional sources of information. … Crucially, breach data allows us to understand what sorts of issues lead to real problems, and this can help us all make better security decisions."

I view Information Technology Security Management from a
business risk management perspective. After all, in the modern enterprise,
every significant business process depends on information technology. Therefore
any risk to the confidentiality, integrity, or availability of digital assets
is a risk to the business.

But what is risk really? A practical definition would be the
probability and frequency of bad things happening and the resulting loss to the
business. From an IT perspective, the bad things are the disclosure, alteration, or destruction of
information based assets like intellectual property, customer information,
trends and projections, and financial, health, and personnel records. The
impact includes the costs of recovering from the incident and also loss of
reputation which often translates into lost revenue and profits and a drop in
stock price.